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5 Tips to Avoid a Contractor Scam

In the consumer world, the word “contractor” is sometimes synonymous with “scam.” The reason being is that consumers aren’t always educated on what they should be looking for when it comes to finding a legitimate and reliable contractor. It’s easy for scammers to pass themselves off as a business. All they have to do is get some business cards made, create a free website and make up a few fake referrals. So how do you prevent yourself from getting scammed? How do you know if the person you’re letting into your home is the real deal?

Here are some tips on how to find a legitimate contractor and prevent a scam:

1. Do your homework.

The Internet can be your best friend and your worst enemy. Remember that just because it’s on the Internet does not mean it’s true. Searching for a contractor online is going to give you plenty of results but they may not necessarily be legitimate. When looking for a contractor it’s important to do your research on them. What’s their rating on the Better Business Bureau or Angie’s List? There are plenty of companies out there who are there to help you, the consumer, find a trustworthy company to work with. If the business you found isn’t on any of those sites, chances are you shouldn’t use them.

2. Do they have insurance?

If you’re paying someone to do work at your home, they should be insured. Your home is their job site and if they get hurt on your property, you don’t want to be liable.

3. Make sure it's in writing.

When getting work done on your home, always make sure you have the job in writing, with the terms listed out. If there’s a warranty, make sure that’s listed as well. The more detail about the job, the better. If it seems pretty vague, ask to have it written in more detail. Sometimes, unexpected issues will come up on a job. Sticky notes or scraps of paper don’t count.

4. Don't pay in full before the job is complete.

If I had a dollar for every time I’ve heard a story about someone paying in full for services before they had them done and then getting scammed, I would be rich. Often times paying in full before any service is done means your “contractor” is going to skip town or they’ll start the work and then one day they’ll decide they don’t want to finish it. It is common for contractors to ask for a deposit to start the job but it shouldn’t be more than 50% of the labor.

5. Always ask questions.

If you don’t understand why you’re being charged for something or need clarification on terms, do not be afraid to ask. You and your contractor need to be on the same page and your contractor should always be able to give you reasonable explanations for their pricing and how they run their business.

Scams are an unfortunate but very real possibility in any industry. The best way to avoid them is to always take precautions and educate yourself as much as possible. If you spot a scam, you should report it to the Federal Trade Commission by calling the FTC at 1-877-FTC-HELP or online at ftc.gov/complaint. Also check out ftc.gov/passiton for more information on different types of scams as well as signing up for Scam Alerts.